Reblog: Oregon Economic and Revenue Forecast, Dec 2015

“Oregon’s economy continues to make significant gains. Job growth has slowed just a bit from early 2015 rates, yet remains more than strong enough to bring the unemployment rate down and account for the influx of new workers as population growth picks up.”

The Oregon Office of Economic Analysis released its latest quarterly forecast. As positive as the overall picture is right now, there are a few dark spots, including a persistent disparity between urban and rural economic health.

Interested in knowing more? Read the full forecast here.

Source: Oregon Economic and Revenue Forecast, Dec 2015

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How To: Quickly Document Inflation Adjustments

Sam Ewing once said “inflation is when you pay fifteen dollars for the ten-dollar haircut you used to get for five dollars back when you had hair.”

cocacola

Source: Library of Congress

Inflation seems to be a constant in our lives. What used to cost a nickel no longer does (my grandparents loved to tell stories about their youth and the cheap Coca-Cola – see advertisement ).

What does this have to do with auditing? Well when we compare the value of dollars over time, it is important to make sure we have an apple-to-apple comparison. We can do that by adjusting for inflation to make sure the purchasing power of dollars today is equal to the purchasing power of dollars of yesteryear.

Luckily for us, the United States Bureau of Labor Statistics has a handy inflation calculator that lets us easily calculate what a dollar in 1980 is worth in 2015 dollars (answer: $2.89).

If I only need to adjust a few figures, I tend to take a screenshot of the calculator and document them in a PDF. Below is an example.Inflationcalc

In our next installment of auditor how to, we will show you how to document more complex inflation adjustments using Excel.

Ian Green, CGAP and OAD Senior Auditor

Ian Green, CGAP and OAD Senior Auditor

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Material Deprivation, Poverty, Child Care and Inflation

Does the relative lack of material deprivation among impoverished Americans mean they have an easy life? Not necessarily. Many of the poorest Americans have indoor plumbing, cars, and cellphones, and yet still struggle to meet their basic needs.

Read more at the Oregon Office of Economic Analysis weblog about evolving poverty measurements, census data tracking, and our accelerating relationship with technology.

Source: Material Deprivation, Poverty, Child Care and Inflation

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Oregon’s history of auditing parallels the growth of the profession

Frequency of word occurrence in scanned books

The field of auditing is taking on a larger role in government, and a growing subject of authors.  Google has scanned many published books and you can use their ‘Ngram Viewer‘ to chart the frequency of a term. Here is the mention of ‘audit’ and ‘accountability’ in English language books since 1800. Auditing was written about much earlier than the broader term of accountability, though the two are running nearly parallel since the 1970s.

The topic of auditing is also reflected in the history of auditing in Oregon. Oregon’s Secretary of State is the ‘auditor of public accounts” as set forth in the 1857 State Constitution. The responsibilities of the auditor of public accounts had already been outlined in Oregon’s Territorial statutes of 1854.

Starting in the territorial days, the auditor was the general accountant of the territory and was also responsible for reporting to the legislature those recommendations deemed “expedient for the support of public credit; for lessening the public expenses; for using public money to the best advantage; for promoting frugality and economy in public offices; and generally, for the better management and more perfect understanding of the fiscal affairs’ of the state.”

Here is an interesting example of a performance audit by Secretary of State Kincaid in 1897. The state purchased paper by weight in those days. Thousands of dollars worth of paper were bought every year but had never been weighed to verify correctness. Secretary Kincaid bought a pair of scales and, in the very first shipment, found it was several hundred pounds less than its claimed weight, resulting in a $19 overcharge. The current value of that overcharge would be $540.

On the national scene, the GAO was created in 1921, which coincides with the first jump in ‘audit’ mentions among the writings. ‘Accountability’ was not a commonly used term during this entire time period.

Then, starting in the early 1970s, both ‘audit’ and ‘accountability’ started their steep increases. GAO developed and issued the first version of Government Auditing Standards, also known as the Yellow Book, in 1972. Correlation doesn’t mean cause because other factors or events could have triggered this growing dialogue about accountability and auditing. For example, the Watergate investigation  leading to President Nixon’s resignation could have sparked increasing use of these terms.

In the early 1980s the Oregon Secretary of State started assigning staff to conduct these performance audits and promoting their value. Secretaries of State Paulus, Roberts, and Keisling all grew the performance audit capacity in the office, during the period that ‘audit’ and ‘accountability’ usage continued their steep climbs. New technologies and analytical tools have allowed the profession to grow in sophistication in the past decades, and information technology audits are now a common genre of performance audits.

One note of interest: the seeds of the Division’s performance audits were planted in Oregon’s Territorial Statutes, and subsequently grew into the Constitution’s current office of Secretary of State.

Compare the previous blue, territorial auditor responsibilities with the definition of performance auditing in the latest Government Auditing Standards:

Performance audits provide objective analysis to assist management and those charged with governance and oversight in using the information to improve program performance and operations, reduce costs, facilitate decision making by parties with responsibility to oversee or initiate corrective action, and contribute to public accountability. [2.10]

There is a remarkable overlap in responsibilities between the Oregon territorial auditor and the modern Secretary of State Audits Division, which complies with these standards.

Auditing has 160 years of history in Oregon and growing more important, as the profession’s trend continues its path here and nationally.

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